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Forgiveness Finalized?

The Small Business Administration (SBA) has finally decided on the rules it will use to determine the Paycheck Protection Program (PPP) loan forgiveness. The SBA has published an application that borrowers will use to ask their lender to remove some or all of the needed money to repay the loan. PPP recipients must spend at least 75 percent of the loan on payroll. The remainder can pay for mortgage interest/rent or utilities. Borrowers have only eight weeks from the day they receive the funds to spend them.

PPP Rules Are Constantly Changing

The SBA has set their rules but many politicians have plans to change those. For example, many small businesses are unable to reopen or fully open within the eight-weeks of receiving their PPP loan. Politicians hope to create a one provision bill that extends the loan use period to 12, 16, or even 24 weeks. We have yet to see any progress towards this goal. With many small businesses having received their PPP loan in late April, politicians have until mid-June to act.

Additionally, up until May 19th, small business owners were able to increase their loan forgiveness even if they had employees who refuted offers for rehire. Before, if your employees refused to come back, employers could document this exchange. Then employers can use it to reduce the required FTE employees they must rehire. Now, the SBA has nullified this process. In a convoluted Q&A, the SBA claims an interim final ruling will allow for the process to increase loan forgiveness, just not right now.


 The PPP application is available here.

More about extending the loan use period from Sarah Hansen.

The SBA answers frequently asked questions here.

Lastly, you can find more information about the PPP from our previous posts here and here.